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[StartupRecipe] Layoff Crisis Hits Korean Startups

#Weekly Funding Overview

[Jan. 30 ~ Feb. `3]

The total funds raised by Korean startups of this week is KRW 51.1 billion.

AdddDigital Marketing-Series ADevsisters Ventures
DamahFoodtech1 billionSeries APosco Capital, Woori financial group
AteamventuresManufacturing Platform5 billionSeries BAltos Ventures, LX International, Hana Securities
HIGHERXStore management-Pre-Series A BridgeInfo Bank, IBK Capital
Future KitchenRobot kitchen-Bonchon International
Law&GoodLegal tech7 billionSeries A2Mirae Asset Venture Investment, HB Investment, Spring Ventures, Hanbit Investment, Now IB Capital
SoomgoclassEducation-M&AClass 101
SweetspotProphtech9.5 billionSeries BAltos Ventures, Signite Partners, Hanwha Investment & Securities, Hana Securities, ES Investor, Woomi, Son&Company
3BigsBio data-Hcarelink
ARC MediaMedia/Content-Kakao Entertainment
Recowaste treatment14.5 billionSeries B BridgeGS, Envisioning Partners, CAC Partners,

Major Funding

  • Korean social venture Dot has secured a KRW 13.4 billion investment. It has raised KRW 30 billion in total. The startup creates a barrier-free kiosk using its own technology to deliver information to people with disabilities and other blind assistive products like braille smartwatches.
  • MGRV, the operator of the co-living house Mangrove, has raised KRW 12.5 billion in investment. Its cumulative investment amounts to KRW 32.5 billion. The annual vacancy rate of Mangrove is 5%, and its sales in 2022 surged five times over those of the previous year. With the investment, the company will develop a special app to build a shared housing platform.
  • Sweet Bio, which owns the Greek yogurt brand Greek Day, has received an investment of KRW 10.5 billion. It is a biotech company with a focus on food that sells its products both online and offline. It has more than doubled every year. It will expand overseas, starting with Japan.
  • AI audio tech Supertone has garnered a KRW 45 billion investment and was acquired by Hybe. Supertone can make up a voice by combining various elements, and the voice can be used for singing and acting. Hybe plans to integrate its production capabilities with Supertone’s voice synthesis technology.

#Trend Analysis

Layoff Crisis Hits Korean Startups

The Korean startup industry is facing a difficult period as a growing number of companies are restructuring due to funding shortages. Last year, big startups such as Watcha, Tal-Ing, Sandbox Network, Spoon Radio, and Riiid underwent significant layoffs.

And this year, even more startups have announced workforce restructuring, leading many to anticipate that this wave of layoffs will continue. The shortage of funding has forced many companies to take drastic measures in order to stay afloat, and the impact on employees has been significant. As the Korean startup industry continues to face challenges, it will be important for companies to find creative and sustainable solutions to the funding shortage and minimize the impact on their employees.

The following are companies undergoing restructuring.

Green Labs, a prominent agtech company that operates a platform used by 800,000 farmers, began tightening its belt after securing KRW 240 billion five years after its establishment. The company has recently pushed for temporary fiscal austerity due to delays in some payments, and no information has been disclosed regarding the workforce cut.

FastFive, which holds half of the market share in the shared office market in Korea, has started giving notice of dismissal to employees in non-core businesses. The company will speak individually with each employee who will be laid off, and this restructuring involves both business and organizational reorganization.

Humart Company, a mental health care startup invested by Kakao Ventures, has also restructured over half of its staff. Despite raising over KRW 5 billion from multiple venture capital firms and actively recruiting talent to expand the business, the company failed to secure follow-up investment and started reducing its size.

Pet healthcare startup FitPet will launch a “Management Efficiency Task Force” to cut costs and gain a competitive edge in the pet care industry amidst the global economic recession. The company will promote structural adjustments in the organization, such as slimming down its size and reducing labor costs.

VOGOPLAY, the company that runs the live commerce platform VOGO, will file for court receivership. The startup grew rapidly by offering deep discounts, but it has reached a point where it can no longer afford its accumulated deficit of KRW 50 billion. The business is currently seeking a breakthrough as it has been unable to pay its vendors.

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